Iowa Electronic Markets
Henry B. Tippie College of Business
W283 PBB
University of Iowa
Iowa City, IA 52240
iem@uiowa.edu
IEM PROSPECTUS: 1994 ARIZONA SENATE RACE
VOTE-SHARE MARKET
At 9:00 a.m. (C.S.T.) Monday, September xx, 1994, the Iowa
Electronic Market (IEM) will open trading in a market based on
the outcomes of the Arizona Senatorial Election. This document
describes the Vote-Share Market related to that race, and should
be viewed as a supplement to the IEM Trader's Manual. Except as
specified in this supplement, trading rules for this market are
the same as for other markets in the IEM.
Payoffs in this market are determined by the percentage of the
total popular vote each candidate receives in the November 8,
1994 election. Thus, for example, contracts for a candidate
receiving 32.4% of the popular vote will be worth 32.4 cents.
CONTRACTS -- The financial contracts traded in this market are:
Code Candidate Name
KYL Jon Kyl
DEM Democratic Candidate (still to be determined)
AZROF Rest of Field
This market will close at noon (C.S.T) on Wednesday, November 9,
1994. As soon after the election as official election returns
are announced, liquidation values will be declared and funds
credited to the cash accounts of the market participants.
DETERMINATION OF LIQUIDATION VALUES -- Liquidation values for
Arizona Senate Vote-Share contracts will be determined as
follows. For each contract in any candidate that a trader owns
at the close of the market, the trader will receive $1.00 times
the candidate's share of the vote. For example, if unnamed AZROF
candidates receive 12% of the vote, AZROF contracts will pay 12
cents. Note that these vote shares necessarily sum to one.
UNIT PORTFOLIOS -- Unit portfolios, consisting of one of each of
the three contracts listed in the market, can be purchased from
or sold to the IEM system at any time. The price of each unit
portfolio is $1.00. Use the "Purchase" option from the TRADING
MENU and enter "1$" as the name of the contract to buy unit
portfolios. Use the "Sell" option from the TRADING MENU, with
"1$" as the contract name, to sell unit portfolios. Purchases
will be charged to your cash account and sales will be credited
to your cash account.
Unit portfolios may also be purchased from and sold to other
traders at current market prices. Use the Purchase and Sell
options as above but enter "MKT" as the contract name. The price
charged for such purchases will be determined as the sum of
current ask prices, and the price paid for such sales will be the
sum of current bid prices. Should no corresponding bid or ask be
present for one of the candidates, contracts in that candidate
will be excluded from the portfolio; otherwise the number of
contracts purchased or sold will be the same in each candidate.
MARKET ACCESS -- Only University of Arizona students and faculty
will be given access rights to the Arizona Vote Share Market.
Access is achieved via the "Market Selection" option on the
Login, Market and other Menus. The maximum investment in the
Arizona Senate Vote Share Market is $20. With five days' advance
notice, funds may be withdrawn on the 15th of any month.